The Canadian dollar was the only one among the major currencies that posted a win against the US dollar yesterday. USDCAD was testing resistance around its weekly highs at 1.3323 when the currency pair dropped over 50 pips to an intraday low of 1.3268. By the day’s close, USDCAD was down 17 pips at 1.3282.
The biggest forex news in yesterday’s New York session was Bank of Canada (BOC) Governer Stephen Poloz’ speech. He hinted that rate cuts may not be on the central bank’s agenda this year. In his speech at the Ontario Securities Commission, he remarked that Canada’s monetary policy is appropriate in the face of global trade tensions.
His comments were especially bullish for the CAD because they came after BoC Senior Deputy Governor Carolyn Wilkins’ dovish remarks on Tuesday. According to her, recent developments abroad could adversely affect the Canadian economy and they may cut rates.
Retail sales due today
For today, forex traders will be keeping an eye out for consumer spending reports from Canada at 1:30 pm GMT. The headline retail sales number is expected to show a 0.3% decline in September. Meanwhile, the core retail sales report is eyed at -0.1%.
The daily chart of USDCAD shows that resistance held at the falling trend line (connecting the highs of September 2, October 3, and November 20). Better-than-expected figures will only confirm Poloz’ confidence and could push USDCAD down to this week’s lows below 1.3200.
On the other hand, disappointing data could spark a rally above this week’s highs. If that happens, look for the currency pair to find resistance at 1.3380 where it made highs on September 3.Download our latest quarterly market outlookfor our longer-term trade ideas.
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